An interesting thing happened in late July that might have forecast the current decline in the fortunes of the Harper government. The Conference Board of Canada forecasted on July 29 that Ottawa would be able to balance its books in 2015 — a year earlier than Finance Minister Jim Flaherty had forecast in the 2010 budget.

The Conference Board also forecasted that the deficit for the fiscal year that ended in March would be $46.9 billion instead of the $53.8 that was forecasted in the same federal budget. The board concluded that, as long as Ottawa sticks to its planned cuts, the deficit would be history by 2015.

At the time, the Harper government was being pounded with criticism for abolishing the long-form census while the 11-point lead it had enjoyed in the polls at the beginning of the summer was melting quickly.

It would have been reasonable for the Tories to seize on the Conference Board report for validation of their economic policies. Instead, they reacted with silence.

Now, we know why. In the second week of October, Flaherty announced in his yearly economic update that the deficit for this fiscal year would be $55.6 billion, not the $53.8 billion forecasted and nowhere near what the Conference Board had projected. He also said there would be bigger than expected deficits in three of the next four years. And he began preparing the provinces for lower transfer payments.

But Flaherty’s bad news speech turned out to be the high point for the Tories in what was a week from hell.

Parliament wasn’t sitting that week. But that didn’t matter in a week that started with the Canadian Forces being booted out of a military base in the United Arab Emirates and the defence minister being denied access to its airspace in a flap over landing rights in Canada. The following day, Canada was denied a seat on the United Nations Security Council in a humiliating defeat.

A year ago, Prime Minister Stephen Harper took a pass on an address by U.S. President Barack Obama at the UN on climate change to do a photo op at a Tim Horton’s in Oakville, Ont. Diplomats interpreted that as Harper’s way of showing the finger to environmentalists, to the UN and to diplomacy in general.@page_break@So, it shouldn’t have been a surprise that the diplomatic world would show Ottawa the finger by choosing Portugal over Canada for the Security Council seat. What is surprising is the Canadian government’s damage control — or lack of it.

One would have thought the Prime Minister’s Office would have had a carefully crafted narrative ready in the event that Canada lost the UN vote. Instead, the best the PMO could do was blame Liberal Party Leader Michael Ignatieff for saying publicly before the vote that Canada didn’t deserve a Security Council seat.

Maybe Ignatieff’s remarks were ill-advised. But the Tories wound up making themselves look petulant in defeat. They also inadvertently implied that Ignatieff has more influence with the international community than Harper does.

Whatever the government is paying Nigel Wright, the incoming chief of staff to the prime minister, it probably won’t be enough. While the UN loss is being attributed to the government’s policies, it clearly shows there are serious issues within the PMO.

The Tim Horton’s crowd may not care about the nuances of foreign policy. But the UN defeat, coupled with the UAE flap and a setback on the deficit — all in one week — could set off a new narrative about the federal government’s managerial competence.

The Tories’ week from hell could very well be the beginning of the end for the Harper government, unless operational changes are made.

But the Liberals won’t be the only threat. On the morning after the UN defeat, several anonymous Tory MPs were quoted in the newspapers. Such a thing would not have happened six months ago because of the PMO’s reign of fear over caucus.

There’s more. That week, Maxime Bernier, former cabinet minister and resident libertarian in the Conservative caucus, outlined his vision for the future of the party at the Albany Club in Toronto. Perhaps that visit was a sign of a future leadership contest — in its embryonic stages, of course. IE